David W. Young, DBAProfessor of management, Healthcare Management Program, Boston University School of Management, Boston, and principal in The Crimson Group, Inc.
The real problem with pharmaceuticals—the substantial cost difference between generic and brand name drugs—is reflected only minimally, if at all, in most co-payment schemes. Co-payments also force low-income patients to choose between filling (or refilling) a prescription and spending their limited resources on food, clothing or shelter.
The solution. Eliminate co-payments for pharmaceuticals. Instead, when there is a generic equivalent for a brand-name drug, require patients who want the brand-name drug to pay the full amount of the incremental cost (rather than just a co-payment). When a Fortune 10 company instituted a plan like this a few years ago, the number of its employees using generic drugs rose from 50% to 99%. The resulting cost savings were substantial, and there was no reduction in the quality of drug treatment.
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